Energy startups have to be ‘very smart’ in how they challenge the big retailers: Evergen’s CEO

Evergen is taking advantage of a “once-in-a-hundred-years” opportunity for startups to gain ground against Australia’s legacy energy retailers, its CEO told Dynamic Business.

Launched in August, last year, Evergen sells intelligent home energy systems that utilise solar power, batteriesand CSIRO technology, which has been exclusively licensed to the energy services startup. Co-founded by Emlyn Keane (CEO) and Marcus Dorreen (Director, Retail & Finance), Evergen was borne out of a working group between CSIRO and AMP Capital, which had explored opportunities to collaborate in the energy sector and decentralise the electricity grid. It has 15 staff across two offices – one in Sydney’s CBD, the other in the CSIRO Energy Centre in Newcastle.

“Energy Intelligence”

According to Keane, Evergen is helping customers save on electricity by combining his team’s expert knowledge of the grid with technology that switches between solar, battery and the grid, depending on what the most cost-effective option is at any given time.

“For instance, if we forecast it’s going to be cloudy tomorrow afternoon we can actually charge up a home’s battery overnight, when it’s cheap, so that the battery is full and available when the occupiers need it during peak times,” he said. “That’s just one example of the way in which our Energy Intelligence can generate dramatic savings for people.

“The soaring cost electricity isn’t the only pain point we’re tackling. We’re also addressing the confusion and difficulty around the means available to people to help them save money on energy. People expect technologies like solar to offer a great, seamless and user-friendly experience but this hasn’t always been the case. That’s where we come – we take care of the whole experience for customers, from the initial sale through to the ongoing management and optimisation of the system.”

“Fast-growing interest”

Keane said that while the solar battery market is still in its infancy (“it really only started last year”), it has grown dramatically, with 7000 battery systems sold in Australia in 2016, according to a report by SunWiz report. Against this backdrop, the startup has had more than 11,000 leads from households interested in making the switch to the Evergen intelligent home energy management system since launch.

“That’s an indicator of how quickly interest is building in this emerging market as well as Evergen’s offering,” he said, before admitting the startup’s strong early results weren’t always guaranteed.

“When Marcus and I first put forward an investment case for Evergen three years ago, no one was taking solar battery storage seriously. Tesla hadn’t yet made its entry into the market and the batteries that were available for home owners cost three times what they do today. We were pitching a business that required battery costs to fall by half within 18 months to be economically viable. Due to the immense credibility of our major shareholders CSIRO and AMP Capital, and the analysis they produced, when we made the claim that battery costs were set to fall by half, people took us seriously and eventually funded the business that we proposed.”

“Inadequate experience”

Keane said Evergen is competing against ‘businesses that bring the technology to the people’, by which he means the major energy retailers as well as small distributors and local electricians.

“It’s fair to say that these players have provided the public with an inadequate experience,” he said. “Electricity prices have more than doubled over the last decade, with retailers drawing blame. Meanwhile, many people who’ve had solar installed have experienced issues with the quality of the installation and the equipment, leaving them wary. The vast majority of installations completed in the last 10 years have had no form of monitoring, meaning people are uncertain whether they’re getting what they paid for in terms of system performance.

“Consequently, there’s a huge appetite for an alternative like Evergen, which has created a financial incentive for saving people the maximum amount of money and maintaining a great customer relationship over the long term; namely, customers are free to opt out of our monthly $8 energy management fee if they feel they’re not getting value.

“Plus, CSIRO regularly analyse the performance of the installed systems and update and improve the core algorithms. We’ve had a number of CSIRO staff, including some of Australia’s leading energy experts, seconded into Evergen and we regularly participate in workshops to understand CSIRO innovations that may be relevant for Evergen.”

“Startups have to be smart”

Asked whether the energy services sector is ripe for disruption by startups such as Evergen, Keane’s was unable to give a clear-cut response: “Yes…and no.”

“There are some very big players in the industry who’ve become entrenched in their positons because they own a majority of the nation’s electricity generators,” he explained. “We’ve seen startups go head to head with the legacy retailers over the years but none have significantly reduced their market dominance. There’s only so much market share a new retailer can gain without having to approach a legacy retailer and ask for an electricity supply contract just to win some of their customers. According to the Australian Energy Regulator (2017), the four largest retailers still supply over 90% of the residential and small customer market.

“The electricity sector is changing, however, with the emergence of home solar and battery systems. In fact, the Australian Networks Association and CSIRO (2017) forecast that 35-45% of Australia’s electricity will be sourced by customer-owned generators by 2050. This once-in-a-hundred-years transformation is allowing startups like Evergen to compete with the legacy retailers in winning over the hearts and minds of customers in the home. To make an impact, startups have to be very smart about where they play and how they position themselves in the market. The advantage they have is speed and agility.”

“Optimism and purpose”

Speaking to Evergen’s future plans, Keane said the startup is currently researching and experimenting with technologies, such as load management, to “enable home owners to power their home’s pool pump, electric car and hot water systems in concert with Evergen’s solar and battery system”.

He added, “We are also exploring virtual power stations, which will ultimately make it possible for people to agree to sell their spare battery capacity back to the grid at times when it’s struggling. Together, the combined energy systems would act like one big power station but better because the power would be delivered to where the grid needs it most. The community would get more reliable power and the neighbourhood would get paid for helping for supporting the grid. We see the technology that we put into peoples’ homes as an enabler of really interesting services that can evolve and improve over time rather than being an end in itself. We’re currently raising equity because the market is growing faster than we can service without additional growth capital.”

“I have a background in engineering and have always had a passion for sustainability, particularly in the built environment and with energy,” he said. “So, when CSIRO and AMP Capital began collaborating on Evergen three years ago, I was asked to take part – and have been involved ever since.

“It’s rare that you get to work in an area that people are genuinely excited about. At a BBQ or the bar, people get that solar and batteries are the future and it’s great just to have a discussion about it. The people who work at Evergen get that too and there’s a sense that we’re building something important here – a sense of optimism and purpose, which is the best part for me.”

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